Further to its October 2018 request for feedback, Moody's launched a Governance Assessment (GA) scoring framework for non-financial public companies in its ratings portfolio. While Moody's indicates that the GA information may inform its credit rating analysis, the assessments purportedly are not tied to or representative of a company's credit rating, which also takes into account qualitative and other company-specific considerations that are not encompassed in the GA framework.
GA scores will consider and evaluate only company information that is publicly disclosed (e.g., SEC filings, investor presentations) across these five governance components, which Moody's deems relevant to governance risk and a credit analysis:
In that scores are based only on publicly disclosed information, companies will be penalized for non-disclosure. The report’s appendices include illustrative examples of fictitious company scorecards and the associated governance characteristics representing each level of the four-point GA scale - from best to worst.
According to the report - which also details the scoring system, potential data sources, and the numerous data points underlying each of the five major governance components - Moody's may expand the GA framework to financial, private and other companies over time.
Access additional information & resources on our Board Practices/Governance Practices page. This post first appeared in the weekly Society Alert!